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Service Reliability and the Optimal Interruptible Rate Option in Residential Electricity Pricing


  • Chi-Keung Woo
  • Nate Toyama


Recent research on electricity pricing extends the traditional peak load pricing problem in many directions. Some notable studies include the time-of-use (TOU) papers by Crew and Kleindorfer (1976, 1978); the cycling analysis by Dansby (1977); the Demand Subscription Service (DSS) studies by Tschirhart and Jen (1979), Panzar and Sibley (1978), and Marchand (1974). Central to these papers is the role played by demand uncertainty in determining the optimal electricity rate structure and capacity planning. With the exception of Tschirhart and Jen and Marchand, these papers do not directly address the question of service reliability from the customer's perspective. Moreover, the supply-side uncertainty caused by random plant outages (as indicated by Chao, 1983) is largely ignored. Finally, these studies, though elegant and innovative, do not analyze the problem of residential rate options, which recently have gained considerable popularity in the United States, especially in California.

Suggested Citation

  • Chi-Keung Woo & Nate Toyama, 1986. "Service Reliability and the Optimal Interruptible Rate Option in Residential Electricity Pricing," The Energy Journal, International Association for Energy Economics, vol. 0(Number 3), pages 123-136.
  • Handle: RePEc:aen:journl:1986v07-03-a10

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    Cited by:

    1. World Bank, 2001. "India : Power Supply to Agriculture, Volume 1. Summary Report," World Bank Other Operational Studies 15288, The World Bank.
    2. Matsukawa, Isamu, 2006. "Regulating a Monopoly Offering Priority Service," MPRA Paper 991, University Library of Munich, Germany.
    3. Isamu Matsukawa, 2009. "Regulatory effects on the market penetration and capacity of reliability differentiated service," Journal of Regulatory Economics, Springer, vol. 36(2), pages 199-217, October.

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    JEL classification:

    • F0 - International Economics - - General


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